As a parent, you may juggle 10 balls in the air at any one time: homework, carpooling, housekeeping, laundry, groceries, play dates—the responsibilities go on. This year, take time to add financial planning to your to-do list. Planning for the long term is important so you and your family will be financially secure in the future.
Start by reevaluating your finances and setting up key financial to-do’s regularly. With 2014 here, make family finances one of your top New Year’s resolutions, making sure that your money is being appropriately distributed to help meet each family member’s individual needs. To get started, follow these top five financial to-do’s:
- Assess your 2014 financial goals. Look at the year ahead and plan out your personal goals that will have an effect on your finances. Perhaps you’re considering having another child, staying home with the kids, purchasing a new home or taking everyone to Disney? Lay out your 2014 objectives and the budget you’ll need to accomplish them. By planning appropriately, you can cross each goal off your to-do list.
- Check up on your estate plan. Preparing for your own death is uncomfortable, but planning properly helps to ensure your loved ones are secure—emotionally and financially—even after you are gone. Without making suitable arrangements in advance, your estate may potentially end up in the wrong hands or may decrease in value significantly, both problems that can be avoided. Speak to your financial professional to strategize your estate plan and have all your documents in one place. If you currently have an estate plan, review it regularly to make sure it is in line with current laws and regulations, while still expressing your goals.
- Set up a trust. The most popular reasons cited for not using a trust are simple procrastination and a belief that a will precludes the need for a trust, according to U.S. Trust’s Wealth and Worth survey. Trusts are designed to help you protect your wealth today and maximize your legacy for your children. They are best for individuals and families that will be making consistent contributions to a fund that is expected to accumulate into a substantial amount. Each trust is unique and designed to address individual situations. Trusts also can be incorporated into your wealth management plan to reduce taxes, increase control over the distribution of your assets and assist loved ones while an estate is in probate.
- Evaluate your insurance plans. Make sure your family has adequate medical, disability and life insurance. Confirm your medical insurance provides coverage for your whole family and, if it does not, consider switching to a plan that does. If you and your spouse are both eligible for coverage through your employers, carefully compare plans. Make sure your current disability insurance will replace at least 75 percent of your income; otherwise, you’ll need to purchase additional coverage either through your employer or on your own. Appropriate life insurance depends on your age, income and number of children. Choosing the right insurance policy is a personal decision and should be made after extensive research. Additionally, always keep an emergency fund set aside, just in case.
- Invest and save for college. Providing for a college education may be the single biggest expense you have in raising your child. It is never too early to establish a college fund for your child. Be consistent by regularly setting some funds away in advance or investing funds on your children’s behalf. There are a number of investment platforms for college.
Though starting the new year with these financial to-do’s won’t offload your day-to-day juggling act, they can create a brighter future for you and your family. Seek a financial professional to help build a financial plan that aligns with your family’s goals for 2014 and beyond. By being prepared for the long term, you can enjoy every precious moment in the short term.
Tiffany Owens is a senior trust officer with U.S. Trust Bank of America Private Wealth Management in Kansas City, in addition to being a mother of two. She assists clients in financial planning for their families.
This article is designed to provide general information about ideas and strategies. It is for discussion purposes only since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Always consult with your independent attorney, tax advisor, investment manager, and insurance agent for final recommendations and before changing or implementing any financial, tax, or estate planning strategy.
U.S. Trust, Bank of America Private Wealth Management operates through Bank of America, N.A. and other subsidiaries of Bank of America Corporation. Bank of America, N.A., Member FDIC.